Estate taxes are varied and complex, so it's a good idea to prepare for them when putting an estate in order and creating a will. You can get tax help by consulting an estate tax attorney or estate planning professional if you need state-specific information, or help maximizing your estate's value, but it helps to understand a few basic guidelines first.
How Does the Estate Tax Affect Me?
While other taxes surrounding the transfer of an estate may apply, chances are good that the estate tax itself won't affect you at all. In 2008, the estate tax is applicable only to estates valued at over $2 million. In 2009, your estate must be worth over $3.5 million before the estate tax applies. The estate tax is not in effect for 2010, so there are absolutely no estate taxes on any estates during 2010. As current legislature stands, estate taxes in 2011 are set to revert to estates valued over $1 million, but there's a high likelihood that estate taxes may change again before this occurs. Bottom line: Estate taxes affect only 2% of the American population with high-value estates.
Be Careful What You Give Away
Another tax that often surrounds estate issues is the gift tax. An individual may gift another individual up to $12,000 tax-free on an annual basis. Couples may give double the gift allowance, so a married couple may give up to $24,000 to an individual annually. Gifts over the $12,000/$24,000 value fall under the gift tax umbrella. Taxes on a gift over $12,000/$24,000 are due with the annual tax return, and the donor is responsible for paying the gift tax.
During your lifetime, you may give up to $1 million in gifts. Any amount that you give beyond $1 million is taxable as part of your estate under the gift tax. Gifts exceeding the gift tax credit are taxed at rates ranging from 18% all the way up to 45%, depending on the value of the gifts. The purpose of the gift tax as it applies to the estate is to prevent people from giving away their estates to avoid paying estate taxes. If anyone gives enough gifts to go over the $1 million lifetime exclusion, the balance beyond $1 million is taxed at the regular estate tax rates.
Think Twice Before You Leave Your Estate to Your Grandchildren
In addition to estate taxes, the IRS and many individual states also enforce something called the generation skipping tax. If you leave your estate to someone more than 37½ years younger than you, your estate is subject to the generation skipping tax. The federal generation skipping tax applies only to estates valued at $2 million, $3.5 million or $1 million, on the same year-to-year schedule as estate taxes. Many states also have their own generation skipping tax, so check with an estate tax attorney to see if the generation skipping tax applies in your state.
Where You Live Plays a Part in Your Estate Taxes
In addition to federal estate tax laws, many states also levy their own estate taxes and generation skipping taxes. If you live in DC, IL, KS, ME, MD, MA, MN, NE, NJ, NY, NC, OH, OR, RI, VT, VA, WA or WI, you may be subject to state estate taxes, generation skipping taxes or even gift taxes, in addition to federal taxes. Additionally, if you live in a state that doesn't impose estate taxes but you own property in a state that does, you'll still have to pay the estate taxes on that property.
Your Estate May Be Subject to Income Taxes
Regardless of whether your estate is valuable enough to be subject to estate taxes, there's a very good chance that your estate could have income taxes assessed. Annuities, IRAs and 401(k)s, in addition to many other types of accounts, are all subject to income taxes upon transfer to their recipient. The IRS treats these accounts as income to the recipient, and they are subject to regular income tax rates. If you have many of these accounts, you may want to consult with an estate tax attorney for tax help to minimize the impact on your loved ones.
When to Get an Estate Tax Attorney
If you have a valuable estate, have given a lot of gifts or are leaving an estate to your grandchildren, it may be a good idea to get tax help by consulting an estate tax attorney. Estate tax attorneys help you maximize your estate by redistributing assets and calculating potential estate tax liabilities. As the estate tax exemption is currently scheduled to reset at $1 million in 2011, you should consult an estate tax attorney for tax help if you expect your estate to be valued over that amount. Additionally, if you live in a state with its own estate tax laws, an estate tax attorney can help you understand them and find a way to protect your estate.
How to Pay Estate Taxes
Estate taxes are due within nine months of a decedent's death. If the estate taxes are not ready by that time, you can file an extension for another six months, but the estimated taxes are due with the extension, not six months later. If you do file an extension and fail to pay estimated taxes due, you'll still have to pay what you owe, plus interest. In cases where paying estate taxes requires the liquidation of assets, it may be difficult to get the money to pay them within the timeframe stipulated by the IRS. In the event that you may need to liquidate assets to pay estate taxes, but aren't sure, seek tax help or consult an estate tax attorney as quickly as possible to ensure you're not caught short when the deadline approaches.
 | Estate sale companies can be extremely helpful if you find yourself in need of holding such a sale. Estate sales can be a fun hobby, a serious business, a home-based business or a part-time sideline for those looking to invest in low-cost estate sale lots for potential turnover. |
 | How do you conduct a successful estate sale? Although many factors contribute, you should focus on five aspects: organization, evaluating, pricing, timing and advertising. |
An estate sale is more than a big garage sale because of the legal and emotional issues. Is holding an estate sale worth it? For a fast reality check, count the number of pieces of ordinary furniture and multiply by $10. Count the kitchenwares and multiply by $.50 or $1 per piece. Even at those low prices, the sale of an estate full of ordinary things can add up to hundreds or thousands of dollars. |
After much tiptoeing, beating around the bush and "what if" scenarios by family members, my grandfather boldly stated, "Well, I guess I better sell the house." My spry 85-year-old grandfather had suffered a second mild stroke that had affected his mobility on one side and taken his peripheral vision and therefore his car keys. |
Having had several deaths in the famiy I have had to empty three households in the past year and will l be emptying a fourth in the near future. The last one is just because I'll be selling the house I've lived in for the last 35 years. |
